Recent GST rate cuts and festive season spending are expected to boost domestic consumption. These measures could counter global economic challenges and strengthen India’s growth this quarter. The Monetary Policy Committee (MPC) kept a neutral stance while watching tariff changes and GST rationalisation.

India’s growth projection for FY26 has risen to 6.8 per cent from 6.5 per cent. Inflation is now expected at 2.6 per cent instead of 3.1 per cent. High-frequency indicators like air passenger traffic, port cargo, and rail freight show slight slowdown. Meanwhile, diesel consumption, government spending, and bank credit have improved.

The Bank of Baroda estimated GST cuts and festive spending could raise consumption by Rs 12 lakh crore to Rs 14 lakh crore. Wedding-related expenses may contribute a large share. Strong domestic consumption keeps India as the fastest-growing major economy in the world.

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Governor Sanjay Malhotra leads the MPC, which meets every two months. The committee examines inflation trends, growth data, fiscal updates, and global conditions. Its decisions directly affect lending rates, borrowing costs, and economic activity.

Analysts are closely watching this meeting. Many expect the RBI to cut rates by 25 basis points. They point to low inflation and global uncertainties as reasons. However, some experts believe the MPC may hold rates steady to assess previous moves and protect stability.

Moreover, the committee will discuss improving liquidity and enhancing credit flow to support growth. This meeting arrives amid mixed economic signals — growth is stable, but global risks are rising. Thus, the decision will carry significant weight.

The RBI will announce its decision on Wednesday, October 1, at 10:00 AM. They will stream it live on their official YouTube channel and social media. Governor Malhotra will explain the reasoning behind the decision at a press conference afterward.

For businesses, banks, and households, this meeting matters. Borrowing costs, credit availability, and investment decisions depend on its outcome. Therefore, the MPC’s announcement could influence India’s economy for months.

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In August, the RBI kept the policy rate at 5.50 per cent after previous easing. Dr Soumya Kanti Ghosh, SBI’s Chief Economic Advisor, said CPI inflation could drop another 65-75 basis points due to GST cuts. Without GST changes, CPI is already below 2 per cent in September and October.

Ghosh added that the 2019 GST rationalisation reduced inflation by 35 basis points in just months. With the new CPI series and base revisions, inflation should stay near the lower end of the RBI target, 4±2 per cent, through FY26 and FY27. October CPI could even reach 1.1 per cent.

SBI believes a September rate cut is justified. Ghosh said the RBI must communicate clearly to avoid mistakes. Lower inflation and stable growth give the central bank room to cut rates and support the economy.

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